Bank Talk: The Underbanked Spend $45 Billion Per Year

Here’s a new post from Bank Talk today about how much the underbanked spend each year on financial services. As noted at the end of the post, these findings represent a big opportunity to provide financial services to this market.

According to Core Innovation Capital, the under-banked spend $45 billion every year on financial services. Those “spends” include:

Credit

Mortgage loans: $9 billion

Retail payday lending: $4.5 billion

Internet payday lending: $3 billion

Pawn Shop: $3 billion

Auto title loans: $1.25 billion

Refund anticipation loans: $500K

Rent-to-own: $5 billion

Overdrafts: $7 billion

Credit cards: $2 billion

Services

Check cashing: $2 billion

Credit score services: $1 billion

Remittances: $2.5 billion

In-store bill pay: $1.9 billion

GPR prepaid: $1 billion

Payroll prepaid: $1 billion

Checking accounts (not overdrafts): $1 billion

One insight that should be readily gleaned from these sales figures is that there is a substantial opportunity to offer services to this sector. These consumers are buying financial products. Moreover, new entrants should be able to get a cut at a lot of producer surplus. Of course, it is only a win-win if new entrants find a way to create something with pricing that gives consumers better value. We don’t want to see more internet payday lending.